TABLE OF CONTENTS I. REPORT LETTER ANALYSIS V. FACILITY DEMAND AND FINANCIAL PROJECTION INTRODUCTION AND EXECUTIVE SUMMARY

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2 TABLE OF CONTENTS I. REPORT LETTER II. III. IV. INTRODUCTION AND EXECUTIVE SUMMARY MARKET ANALYSIS COMPARABLE STADIUM AND COMPARATIVE MARKET ANALYSIS V. FACILITY DEMAND AND FINANCIAL PROJECTION

3 I. REPORT LETTER

4 March 31, 2005 Mr. Steve Orsini, Director of Athletics Executive Vice President University of Central Florida PO Box Orlando, FL Dear Mr. Orsini: C.H. Johnson Consulting, Inc. (Johnson Consulting) has prepared a market and financial analysis for the development of a new football stadium for the University of Central Florida (UCF). This report includes estimates of market potential, demand, and projected financial performance. The attached report explains the methods used to develop the estimates and discusses the results of the report. Johnson Consulting has no responsibility to update this report for events and circumstances that occur after the date of this report. The findings presented herein reflect analysis of primary and secondary sources of information. Johnson Consulting utilized sources deemed to be reliable but cannot guarantee their accuracy. Moreover, estimates and analysis presented in this study are based on trends and assumptions, which usually result in differences between the projected results and actual results. And because events and circumstances frequently do not occur as expected, those differences may be material. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, C.H. JOHNSON CONSULTING, INC. 6 East Monroe 5 th Floor Chicago, Illinois Phone: Fax info@chjc.com

5 II. INTRODUCTION AND EXECUTIVE SUMMARY

6 INTRODUCTION C.H. Johnson Consulting (Johnson Consulting) is a nationally recognized authority on stadiums, arenas, and university development projects. The firm works nationally for universities, cities and counties, and private sector developers. Locally, Johnson Consulting has worked on projects in Osceola County (Osceola Heritage Park) and Daytona Beach (Ocean Center). Johnson Consulting has also been working on the new Osceola County Convention Center and hotel project, and a conference center for Embry Riddle Aeronautics University, located in Daytona Beach. Nationally, the firm is working on a university football stadium and arena for Delaware State University in Dover, Delaware and recently completed work on a new football stadium for The Citadel in Charleston, SC and the University of Northern Iowa s new McLeod Center, a 6,500 seat multi-purpose arena. Johnson Consulting is one of the top sports consulting firms nationally, serving universities and municipalities. Johnson Consulting is submitting this report presenting a market and financial analysis for the proposed on-campus football stadium at the University of Central Florida (UCF) main campus in Orange County, Florida. The football stadium will complement the other developments occurring on campus including student housing, retail, and a new Convocation Center. The analysis includes estimates of demand for the proposed on-campus football stadium as well as its projected operating financial performance. Objectives of the Study Johnson Consulting has undertaken a program of services designed to accomplish the following major objectives: To communicate the transaction structure, in order to isolate demand, revenue and expense factors pertinent to the Stadium project specifically, To provide an evaluation of UCF Athletics as well as demand and market support patterns within the competitive area for the regional stadium marketplace, To identify and evaluate the competitive environment for the proposed stadium, should UCF decide to allow for other events within the facility besides university football games, University of Central Florida Section 2 Page 1

7 To independently estimate achievable demand potential for the proposed football stadium s elements on behalf of the UCF Athletics Association, Inc.(UCFAA) and UCF, and To present a ten year projection of revenue, expenses, debt service and funds available for other purposes and coverage ratios. In addition to this introduction and methodology review, the report contains the following sections: Section 3 presents an economic and demographic overview of the local market. The information in this section is an essential component in understanding the economic and market framework that will support a new facility. Section 4 presents an overview of trends and factors in the stadium and entertainment industry, with specific consideration given to conditions in the college and university development that may impact the development and performance of facilities at UCF, as well as case studies on comparable sports facilities located in markets that offer emerging or successful sports programming that could serve as models for development for UCF. Section 5 presents a financial and demand projection for the football stadium. It reflects Johnson Consulting s opinion of demand and UCFAA s business model combined with our assessment of market demand. Approach / Methodology In order to accomplish these objectives, the program of analysis conducted by Johnson Consulting has undertaken the following research tasks: Interviewed stakeholders to understand the deal structure, project interrelationships, and distribution of cash flows, Analyzed the proposed site and surrounding on- and off-campus development patterns and transportation access relative to factors which influence market support and demand penetration, Examined and projected regional economic trends relevant to population growth and changes in entertainment options for consumers who may use stadium facilities, Interviewed current management, athletics officials, and other university representatives in order to gather information about expectations for the future of UCF athletics programming, Identified and examined relevant competitive and/or comparable stadium projects, both within and outside of Conference USA, University of Central Florida Section 2 Page 2

8 Conducted surveys of possible suite, advertising, branding, and naming rights partners and assessed the level of interest expected from these partners, Revised management s internal analysis and reflected on management s assumptions. Key staff at UCF has worked on football programs at Georgia Tech and others, and have a working knowledge of stadium operations. As such, their input was a key determinant in our analysis, and Reviewed our projections with Global Spectrum staff, who operate facilities on the UCF campus and who are familiar with football stadium operations in similar markets. This report is the result of this evaluation, together with supporting data and documentation including projected results of financial operations. Terms of Assignment This report is based on estimates, assumptions, and other information obtained from our research, our prior experience with similar assignments, and information received from UCF, Global Spectrum, Aramark, and other sources. The sources of information and basis of estimates and assumptions are stated herein. Projections of stadium demand, attendance, contractual relationships, operating revenues, operating expenses, debt service and coverage ratios presented within this report are based Johnson Consulting s assessment of various data, market characteristics, extensive discussions with UCF and documented assumptions. Projections of other revenues and expenses are based on input from UCF officials and UCFAA s financial team. Since certain estimates and assumptions are inherently subject to variation depending on evolving conditions, we cannot represent our projections as results that will actually be achieved. In accordance with our engagement letter, Johnson Consulting did not ascertain the legal or regulatory requirements applicable to this project, including zoning or other state and local government regulations, permits, and licenses. Furthermore, no effort has been made to determine the possible effect on this project of present or future federal, state, or local legislation, including those related to jurisdictional, environmental, or ecological matters or interpretations thereof. Description of the Project The proposed football stadium project has been recommended to be located on the northeast side of the main campus area proximate to the campus main circumferential roadway (Gemini Boulevard). While a final building program is not in place, working with 360 Architects, we assume the stadium will have a capacity of 45,000 seats, 21 leasable luxury suites, and 1,000 leasable club seats. We have University of Central Florida Section 2 Page 3

9 assumed that there will be 9,588 parking spaces and an area for 75 RVs and buses. The stadium will be owned by the University of Central Florida and operated by the Athletics Department, meaning that cash flows through the Athletics Department. The recommended on site campus location affords the proposed project accessibility and visibility to prospective and existing students. Moreover, all of the existing and planned campus amenities, including the proposed Convocation Center, available to students effectively represent project amenities appealing to both students and athletic recruits alike. The end product will be highly appealing, and from both an athletics and urban planning standpoint, will distinguish the campus within Florida, within its conference, and nationally. The recreation, fitness and leisure facilities, and programs on the UCF campus are extensive and include the following: Recreation Center Multi-purpose gymnasium Jogging track Cardiovascular fitness and weight areas Climbing tower Group exercise areas Locker rooms Wellness suite Exterior pool and deck Exterior sand volleyball courts New free-form 230,000 gallon outdoor pool 18-hole disc golf course Softball/baseball fields/9-acre multipurpose field Outdoor recreation areas (picnic facilities, watercraft, and nature trails) The proposed football stadium on the campus of UCF will provide a facility that will not only enhance the athletics program at UCF, but also serve the needs of a growing university. The facility will help enrich the profile of football program, as it currently uses the off-campus Citrus Bowl. The development of the stadium, along with the Convocation Center, will help transition UCF out of the Atlantic Sun and Mid-American Conferences (football only) and into Conference USA, which will occur on July 1, University of Central Florida Section 2 Page 4

10 Executive Summary The Orlando market continues to grow as a destination. It has begun to expand and support a second tier of destination venues, such as the Disney Wide World of Sports Complex and Osceola Heritage Park Silver Spurs Arena. Its corporate presence is solid and growing. Even though the market has a very high ratio of professional sports facility seats on a per-capita basis, the market generally supports its many sports teams, whether major, minor, or university based. The area has sustained continued growth in population albeit with a reduced rate of increase from prior years and can draw on increasing population centers in both Volusia and Brevard Counties. As detailed above, the proposed football stadium is recommended to be located on the northeast side of the main campus area proximate to the campus main roadway. A collection of projects is currently affecting the overall face of the UCF campus, which includes the football stadium, the proposed Convocation Center, a renovated UCF Arena, housing, retail, parking, and an array of other athletics facilities. With the development of these projects, UCF will have the critical mass of attractions, easy access via two limited access/toll road facilities (SR 417 and SR 408), and proximity to downtown Orlando to support a new football stadium. Other sections in this report will investigate the sports and event market to support the building design and program, as well as make projections of demand and financial performance. Currently, there is a national trend towards upgrading, expanding, and improving public assembly facilities such as stadiums and sports complexes. This has led to the development of new and renovated facilities throughout the country, not only in major professional sports but also at minor league and collegiate levels. This development is a response to increased demand by the sports and entertainment markets, which have grown in recent years. Also, the construction of new facilities can lead to improvement in the athletics programs at universities, with newer venues that offer better opportunities. The addition of new facilities will likely allow UCF to attract better athletes and more students, bring more events into the area, as well as provide area citizens with better public facilities, and increased entertainment options. The recent growth of facility development has also led to private-sector investment, as new revenue streams such as naming rights and premium seating have allowed facilities to generate a better return on investment. In the past, stadiums were almost entirely developed and subsidized by the public sector as a community service, without an emphasis on generating financial returns. However, even in the case of a privately-developed facility, public-sector participation is often necessary in order to make a project viable in the long run. While owners of a privatelydeveloped sports facility will have an incentive to maximize profits, public University of Central Florida Section 2 Page 5

11 investment in infrastructure or tax relief, for example, are often necessary both financially as well as to enable the public sector to become more of a partner in the project. Although the Orlando area has the Citrus Bowl as its major stadium facility, numerous markets with 1.5 to 5.0 million residents have multiple offerings. In comparison to other markets that are similar in size to Orlando, the area is above average in terms of its representation of disposable income and the number of business establishments. It is recommended that an on-campus football stadium for UCF with a capacity of 45,000 people is appropriate for the market and the university. Additionally, approximately 21 suites and 1,000 club seats are recommended. This type of facility will be able to host a wide range of events, such as sporting events, concerts, and community events. At the present time, the stadium will only host UCF football events. However it is important that the facility be designed with the flexibility to host these other types of events at a future date, should these event types be determined suitable within the community. How Much Business Will the Stadium Generate? Based on these assumptions, once the stadium opens in 2006, a total of six UCF football games. This number is projected to stay the same throughout the projections. Total facility attendance is projected to range from 138,000 in the first year of operation to more than 155,000 per year. Based on the projected demand, the stadium is projected to generate a net operating income of approximately $4 million in , after consideration of operating revenues and expenses, but before debt service payments. The projected net operating income increases to approximately $5 million in The operating revenue does not take into consideration UCF fundraising efforts, which generate an additional $750,000 per year and can be pledged to debt service. University of Central Florida Section 2 Page 6

12 III. MARKET ANALYSIS

13 MARKET ANALYSIS In order to analyze the market opportunity for a new football stadium on the campus of the University of Central Florida (UCF), in conjunction with development of an overall innovative masterplan on campus which includes housing, retail, and a new Convocation Center and athletics complex, Johnson Consulting reviewed market conditions and characteristics within the greater Orlando Metropolitan Statistical Area (MSA). While characteristics such as population, employment, and income are not strict predictors of performance for sports facilities, they provide insight into the capacity of a market to support facilities or activities. In addition, the size and role of a marketplace, recent or historical development trends, as well as competing or complementary attractions and venues all affect the scale or quality of facilities developed for a particular market. The objective of this analysis is to identify factors that may affect the level of support that would exist for an additional sports facility at UCF. This section also presents an overview of the university and its athletics department and facilities. University of Central Florida Johnson Consulting assessed various conditions and characteristics of UCF that will impact the planned football stadium. Characteristics such as current and projected student enrollment, athletics programs offered, resource support for entertainment programming, and the quality of existing facilities will impact the performance of the new and existing sports facilities. The University of Central Florida, a member institution of the Florida State University System, was formerly named Florida Technological University. Florida Tech officially began operations on June 10, 1963, when the State Legislature passed Bill No. 125 and Governor Farris Bryant signed it into law: An ACT authorizing the state board of education to establish a state university or a branch of an existing state university in the east central part of Florida. The name was changed from Florida Technological University to University of Central Florida by action of the Florida Legislature on December 6, The UCF campus is located 13 miles east of downtown Orlando and contains a full range of facilities developed over UCF s 40-year history and in a manner consistent with the scope of facilities of a large metropolitan university. The 1,415-acre campus currently contains 115 buildings with more than 5.4 million gross square feet of space. The construction of the UCF campus first began in January, The campus is within approximately 2.5 miles of two limited access/toll road facilities (SR 417 and SR 408) affording excellent regional accessibility. The Central University of Central Florida Section 3 Page 1

14 Florida Greenway (another name for SR 417) is a major limited access toll facility, located just 2.5 miles from the UCF campus, serving the eastern part of the Orlando urban area providing direct linkages to Interstate 4 to the north and south, Orlando s East-West expressway (SR 408), the Beeline Expressway (SR 528), and Florida s Turnpike to the south. The UCF campus is approximately 18 miles from Orlando International Airport and about 40 miles from the Atlantic coast. The construction of the UCF campus first began in January, 1967, and first classes began in October, 1968, with original enrollment of 1,948 students. In recent years, UCF s expansion has been a critical factor influencing the growth and development of the East Orange County area. UCF has been a magnet for major national research and technology companies, capitalizing on and spawning development of surrounding corporate parks as well as general business tenants that have contributed to an expanding population base along with extensive commercial and residential development. One of Florida s 11 public universities, UCF offers 86 Baccalaureate programs, 68 Master s programs, three Specialist programs, and 24 Doctoral programs in nine colleges. In addition to the 1,400 acre main campus in Orlando, UCF has 12 regional campuses: Daytona, Deland, and Sanford/Lake Mary (Eastern Region); Downtown Orlando (Central Region); Cocoa, Melbourne, and Palm Bay (Southern Region); and South Lake, MetroWest, Ocala, Osceola, and South Orlando (Western Region). From the original enrollment of 1,948 students in October, 1968 when UCF began its first classes, the university s total student population has grown to 42,837 in the Fall of 2004, including 35,385 undergraduate students and 7,452 graduate students. Table 3-1 shows the historical enrollment at UCF since University of Central Florida Section 3 Page 2

15 Table 3-1 Historical Enrollment By Level* Undergraduate Graduate Total ,426 3,899 26, ,445 3,966 27, ,281 4,021 28, ,859 4,150 30, ,270 4,202 31, ,152 4,301 33, ,124 4,889 36, ,331 5,464 38, ,400 7,285 41, ,385 7,452 42,837 Annual Growth (%) 5.20% 7.46% 5.56% * Final fall term, includes full- and part-time students. Source: UCF, Johnson Consulting As the table shows, enrollment has progressively increased over the last ten academic years. In 1995, total undergraduate and graduate enrollment was 26,325. In subsequent years, the annual growth rate has been approximately 5.56 percent. While graduate students comprise a small share of total enrollment, the number of student in graduate degree program has increased by more than seven percent per year. Strategic Planning The UCF Strategic Plan: Pathways to Prominence, offers a framework for the University of Central Florida to realize its vision of becoming the nation s leading metropolitan research university recognized for its intellectual, cultural, technological, and professional contributions and renowned for its outstanding programs and partnerships. Twelve strategic initiatives form the foundation of the strategic plan. The following points provide background information about each initiative, outlining the objectives that support each activity. Pathway One: Enhance UCF s Academic Mission - Strategic Initiative 1: Promote Excellence in Undergraduate Education - Strategic Initiative 2: Increase Prominence in Graduate Studies - Strategic Initiative 3: Foster Excellence in Research and Creative Activities University of Central Florida Section 3 Page 3

16 - Strategic Initiative 4: Promote Visual and Performing Arts* Pathway Two: Serve The Central Florida Metropolitan Region - Strategic Initiative 5: Contribute to Regional Economic Development* - Strategic Initiative 6: Expand Access to Educational Excellence - Strategic Initiative 7: Enhance Collaboration - Strategic Initiative 8: Expand Partnerships with Schools* Pathway Three: Strengthen UCF s Services and Processes - Strategic Initiative 9: Increase Operational Excellence* - Strategic Initiative 10: Enhance the UCF Community* - Strategic Initiative 11: Increase Visibility* - Strategic Initiative 12: Enhance University Resources* * Initiatives that are enhanced by improved athletics and improved facilities for them. UCF Athletics UCF currently has 17 men s and women s athletics teams that compete at the NCAA Division I level in the Atlantic Sun Conference (ASC). As not all ASC schools offer football programs, in this sport UCF currently competes in the Mid-American Conference, at the Division I level. Table 3-2 lists the sanctioned intercollegiate athletics teams offered at UCF. Table 3-2 UCF Athletics Men's Athletics Women's Athletics Baseball Basketball Basketball Cross Country Cross Country Golf Football Rowing Golf Soccer Soccer Softball Tennis Tennis Indoor Track & Field Outdoor Track & Field Volleyball Source: UCF, Johnson Consulting University of Central Florida Section 3 Page 4

17 On July 1, 2005, UCF will transition out of the Atlantic Sun Conference and Mid- American Conference and into the more competitive Conference USA. While Conference USA celebrates its 10 th anniversary in , it is preparing to embark on a new era in its history. Marshall University, Rice University, Southern Methodist University, University of Tulsa, UCF, and University of Texas El Paso will join East Carolina University, University of Houston, University of Memphis, University of Southern Mississippi, Tulane University, and University of Alabama - Birmingham in a 12-team conference with competition beginning in Current members University of Cincinnati, DePaul University, University of Louisville, Marquette University, and University of South Florida will become members of the BIG EAST, while Texas Christian University goes to the Mountain West and University of North Carolina - Charlotte and Saint Louis University will join the Atlantic 10. Conference USA sponsors 19 sports - baseball, basketball, cross country, football, golf, soccer, tennis, and track and field (indoor and outdoor) for men and basketball, cross country, golf, soccer, softball, swimming and diving, tennis, track and field (indoor and outdoor), and volleyball for women. In our opinion, the shift to Conference USA will be a big move for UCF, and complements the other efforts by UCFAA in their effort to build new on-site facilities and develop talent by recruiting top student athletes administrators and coaches with national reputations. UCF Facilities Figure 3-1 on the following page, graphically portrays the on-campus offerings, specifically showing the proposed site for the football stadium. University of Central Florida Section 3 Page 5

18 Figure 3-1 The following text describes other facilities on the UCF campus: Wayne Densch Sports Center - Opened in August of 2003, Wayne Densch Sports Center is the newest addition to the UCF athletics facilities. The 44,000 square foot facility is home to the UCF football program and features a 11,200 square foot Strength and Conditioning Center, 5,000 square foot Sports Medicine Center, 4,000 square foot locker room, theater-style meeting auditorium, and coaches offices. All of UCF s student athletes can utilize the Sports Medicine Center and Strength and Conditioning Center. Jay Bergman Field This baseball stadium has a seating capacity of 1,000 with berm seating for an additional 1,000 fans. The facility also includes office space for the UCF baseball coaching staff, a reception area, a small conference area, the UCF Athletics Hall of Fame, and an indoor facility that features three batting cages and two pitching mounds. The facility opened in January, Florida Citrus Bowl - The current home to the UCF Golden Knights football program. The 65,438 seat facility, located just west of downtown Orlando, has a long history of renovations and additions. The Citrus Bowl s history dates to 1936, when President Franklin D. Roosevelt started a WPA Project University of Central Florida Section 3 Page 6

19 that would put people to work during the depression. The original cost of the Orlando Stadium was approximately $115,000. In 1947, the Orlando Stadium was renamed the Tangerine Bowl. The stadium at the time only consisted of 10,000 seats. By 1952, the stadium was expanded to 12,000 seats. Another expansion took place in 1968 with the addition of 5,000 more seats bringing the total to 17,000. That expansion also saw the erection of the first press box. Between 1974 and 1976, the Tangerine Bowl underwent more renovation. The addition of more seats brought the total capacity to 52,000. In 1976, the name of the stadium was changed to the Citrus Bowl and altered again in 1977 to Orlando Stadium. By 1983, the facility as well as the New Year s Day college football bowl game held in Orlando annually, was changed to the Florida Citrus Bowl in conjunction with an annual sponsorship agreement of $250,000 with the Florida Department of Citrus. In 1989, a major $30 million dollar renovation project added upper decks to both sides of the field. Each single upper deck contained 9,000 seats. Four concrete ramp towers at the corners of the stadium were also constructed to allow easier access to the upper decks. The look gave the Florida Citrus Bowl a coliseum like appearance, but still expanded an older facility and does not meet the standards seen in better collegiate or professional stadiums. The expansion also included 30 private suites on the east side of the upper deck, individually leased by Orlando businesses and individuals. A new press box was also constructed to accommodate 250 writers. The press box houses 14 individual booths, including two for television and four for radio. After the renovation, the seating capacity was raised to 66,438. With the addition of temporary bleachers in the north end zone, the capacity exceeds 70,000. In the summer of 1999, the stadium was again improved with the addition of contour seating and two escalators. The new scoreboard and video replay screen, measuring 35 feet high by 107 feet, was installed in the fall of The $3 million project also added two full-color displays on the facing of the upper deck, a new auxiliary scoreboard, and a new sound system. Other features in the Florida Citrus Bowl include two 9,000 square foot locker rooms, adjacent practice facilities, and 50 concession stands and restrooms. In addition, the facility includes the Citrus Bowl Centre, which is adjacent to the south end zone of the stadium. The ground level of the building includes University of Central Florida Section 3 Page 7

20 a 5,000 square foot conference center and the upper part of the building houses the executive offices of Florida Citrus Sports Association, which hosts the annual Capital One Bowl and Champs Sports Bowl. Other events that have taken place at the Citrus Bowl include motorcycle races, rock concerts, and other various sporting events. One such sporting event was World Cup Soccer in The Citrus Bowl was one of eight sites chosen in the United States to host the soccer matches. After the month long event, the Citrus Bowl was chosen as the best site by tournament organizers. The Citrus Bowl again hosted world class soccer when the 1996 Olympic Games came to Orlando. Stoneybrook Golf Course Home to the UCF women s golf team. The par 72 course was designed by the widely renowned Clifton, Ezell & Clifton Golf Design Group. Rio Pinar Country Club Home to UCF men s golf. Rio Pinar was designed in 1957 by Mark Mahanna. The tree-lined golf course provides 6,978 yards of championship golf. From , Rio Pinar hosted the Citrus Open, one of the events on the PGA Tour. Following the 1978 event, the course hosted the Ladies Citrus Classic from , an LPGA Tour event. Orlando Metro Area Overview Orlando lies in central Florida, encompassing approximately 3,490 square miles. The United States Office of Management and Budget (OMB) defines the Orlando MSA to include Lake County, Orange County, Osceola County, and Seminole County. Due to the proximity of UCF to the east coast, the MSA also has economic and transportation ties to both Volusia and Brevard Counties. Population The population of the Orlando metropolitan area grew by an estimated average of approximately 46,000 persons per year from 1996 to The current estimated population in the Orlando metropolitan area is approximately 1.88 million. The area has sustained continued growth in population albeit with a reduced rate of increase from prior years. The population of the Orlando MSA is projected to increase at an average annual rate of about 2.2 percent or approximately 40,000 persons per year from 2004 to 2006, climbing to more than 1.9 million by 2006, as shown in Table 3-3. University of Central Florida Section 3 Page 8

21 Year Table 3-3 Orlando MSA Population Population (000's) Annual % Change , , % , % , % , % , % , % , % 2004* 1, % 2005* 1, % 2006* 1, % Average Annual Percent Growth, % * Projections Source: U.S. Census Bureau, Regional Financial Associates Population growth in the Orlando area has exceeded state and national growth rates over the past 20 years and is expected to remain well above state and national levels in the foreseeable future. In-migration accounted for nearly 80 percent of the area s population gain over the past ten years. In-migration driven by job growth will continue to represent the dominant component of population in the future with retiree migration representing a relatively small, but significant secondary component of in-migration. Table 3-4 presents extended population projections for the MSA through the year University of Central Florida Section 3 Page 9

22 Year Table 3-4 Orlando MSA Population Projections, Population (000's) Annual % Change , , % , % Average Annual Percent Growth, % Source: Bureau of Economic Analysis Average annual population growth in the Orlando MSA is expected to decrease slightly to 1.8 percent between 2010 and 2015, and then decrease to 1.6 percent between 2015 and The projected overall average annual growth for the MSA between 2010 and 2025 is 1.6 percent, with the population projected to reach nearly 2.5 million in While not part of the Orlando MSA, nearby Volusia and Brevard Counties provide access to an additional 920,000 people. Volusia County (including Daytona Beach), located just 50 miles northeast of Orlando, has long been known for its tourism and recreational activities. Volusia County is the home of the women s LPGA and NASCAR. More than eight million tourists travel to Volusia County each year to take advantage of its natural attractions, golf courses, historic sites, special events, and Daytona Beach s World s Most Famous Beach. Also located in close proximity to Orlando, Brevard County is best known as the home to NASA s Kennedy Space Center, and as a result of the Center s presence, the area has a strong base of technology businesses and corporations. These areas historical and increasing connection to Orlando and UCF s proximity and accessibility to those counties via SRS28 and I-95 supplement the Orlando MSA s population base. As such, both of these counties provide additional sources of attendee demand for events that take place at all of UCF s venues. The success of an football stadium, or any public assembly facility, lies in its ability to develop a programming strategy that appeals to a broad cross-section in the marketplace. Nonetheless, the composition of the local population base must also display appealing characteristics at various segments such as age and income. A market s age composition can be a factor in determining potential event demand, as attendees for many types of events vary. Certain event types have various characteristics that appeal to different age groups. Concerts target teenagers to more mature adults, while family shows are primarily aimed at adults with younger University of Central Florida Section 3 Page 10

23 children. Table 3-5 summarizes the Orlando MSA s age composition by group from 1998 through Year Median Age Table 3-5 Orlando MSA Population Distribution Total MSA Population (000's) % Population by Age Bracket , % 14.7% 23.2% 28.9% , % 14.6% 23.4% 27.5% 2003 na 1, % 14.5% 23.4% 27.8% 2004 na 1, % 14.3% 23.3% 28.1% U.S. Average na 9.7% 13.8% 22.9% 28.3% Source: Sales and Marketing Management, Johnson Consulting In 2002, the median age of the MSA was 35.5, compared to the country s average median age of The market s share of permanent residents that are in the 18-to- 24 age group is significantly lower than that of the U.S. as a whole. The Orlando MSA has noticeably more people in both the 25-to-34 and the 35-to-49 age groups; however, the overall age composition of the MSA is fairly similar to that of the rest of the country, and this does not appear to help or inhibit the potential demand of a new on-campus football stadium. Income and Employment The strength of a market s income and employment can be an indicator of its potential ability to support public assembly facilities. In general, higher income levels lead to greater amounts of disposable income, which can be spent on nonessential items such as recreation and entertainment. Less wealthy markets will have less disposable income available to spend on event tickets, for example, and would be expected to provide a lower level of attendee demand. Indicators of a market s overall wealth and growth can include trends in certain sectors of income and employment, such as construction, manufacturing, services, as well as finance, insurance, and real estate (FIRE). For many university-based events such as football games, attendance is largely independent of a market s wealth, and will depend heavily on student support. A healthy and diversified economy provides not only employment and disposable income for a market s residents, but it also helps to insulate an area from economic downturns. Markets that have historically relied on one sector, such as University of Central Florida Section 3 Page 11

24 manufacturing, have often had difficulty recovering from market shifts to other sectors, which leads to an overall loss of local income and employment. Household income levels by county within the Orlando MSA are illustrated in Table 3-6. Table 3-6 Orlando Metro Area - Household Income Characteristics by County Year County Orange $15,298 $30,252 $41,920 Seminole $18,289 $35,637 $49,593 Osceola $12,984 $27,260 $38,971 Lake $12,489 $23,395 $35,372 Source: U.S. Census Bureau, Scarbourough Report, Charles Wayne Consulting, Johnson Consulting As shown, Orange County and Seminole County households have the highest incomes in the Metro Area, reflecting greater percentages of professional and managerial employees among these area s household heads than in Osceola and Lake Counties, which house larger numbers of low-wage service employees. The distributions of income by household for the Orlando MSA are shown in Table 3-7. Table 3-7 Orlando MSA Household Distribution By Income Income Level Percent Less than $25, % $25,000 to $34, % $35,000 to $49, % $50,000 to $74, % $75,000 and greater 17.0% Source: U.S. Census Bureau, Scarbourough Report, Charles Wayne Consulting, Johnson Consulting More than 25 percent of households in the Orlando MSA have annual incomes between $35,000 and $49,999 with approximately 34 percent of households having annual incomes of $50,000 or greater. While this demonstrates the affluent nature of University of Central Florida Section 3 Page 12

25 the Orlando MSA, a number of households, at approximately 22 percent, have annual incomes of $25,000 or less. Table 3-8 displays total non-farm income by sector for the Orlando MSA from 1996 to Table 3-8 Orlando MSA Non-Farm Income By Sector ($Millions) Sector Construction 1, , , , ,360.0 Percent of Total 7.0% 6.7% 6.7% 6.7% 6.8% Manufacturing 2, , , , ,632.5 Percent of Total 8.8% 8.6% 8.2% 7.9% 7.6% Transport and Utilities 1, , , , ,247.9 Percent of Total 6.8% 6.7% 6.6% 6.7% 6.5% Wholesale Trade 1, , , , ,516.9 Percent of Total 7.1% 7.0% 7.0% 7.2% 7.2% Retail Trade 2, , , , ,735.5 Percent of Total 11.8% 11.8% 11.3% 11.1% 10.7% FIRE* 1, , , , ,851.1 Percent of Total 8.1% 8.3% 8.7% 8.9% 8.2% Services 9, , , , ,580.5 Percent of Total 37.5% 38.2% 38.5% 38.4% 39.1% Government 3, , , , ,998.6 Percent of Total 12.9% 12.7% 12.1% 11.5% 11.5% Other Percent of Total 0.0% 0.0% 0.9% 1.6% 2.4% Total 24, , , , ,751.7 Percent Growth % 11.1% 8.5% 9.5% *Finance, Insurance and Real Estate Source: Bureau of Economic Analysis The services sector is by far the largest contributor to income in the MSA, with 39.1 percent of the total in This is largely due to the tourism industry, driven by the area s theme parks and the millions of tourists they attract. Government (11.5 percent) and retail trade (10.7 percent) comprise the second and third largest shares of income in the MSA. Table 3-9 displays gains and losses in employment by sector in the MSA from 1996 to University of Central Florida Section 3 Page 13

26 Table 3-9 Orlando MSA Employment by Sector (% Change ) -1.2% -0.9% -0.7% Retail Trade Government Manufacturing -0.1% -0.1% 0.0% Finance, Insurance, Real Estate Construction Transportation and Utilities Wholesale Trade Other 0.1% 0.1% Services 2.7% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% Source: Bureau of Economic Analysis As the table shows, the services sector is the driving force in job growth in the MSA and had the largest increase in its share of employment, with 2.7 percent growth from 1996 to This is consistent with most of the U.S., where the services sector has generally experienced the largest job growth. No other industry compares to the services sector in terms of growth; however FIRE and construction grew relative to other sectors. On the other hand, retail trade saw a steady decline in employment (1.2 percent) within the MSA. Table 3-10 compares the MSA s unemployment rate and per capita income. University of Central Florida Section 3 Page 14

27 Table 3-10 Unemployment and Per Capita Income in Orlando MSA Year Average Monthly Unemployment Rate Per Capita Income Orlando MSA US Orlando MSA US % 5.6% $18,456 $19, % 6.9% $18,565 $20, % 7.5% $19,193 $20, % 6.9% $19,765 $21, % 6.1% $20,282 $22, % 5.6% $21,209 $23, % 5.4% $22,176 $24, % 4.9% $23,236 $25, % 4.5% $24,508 $26, % 4.2% $25,692 $27, % 4.0% $26,974 $29, % 4.8% $27,003 $30, % 5.8% na na % 6.0% na na % 5.5% na na Compounded Annual Growth Rate %* -0.1%* 3.5% 4.1% Average %* 5.6%* $22,255 $24,360 *From 1990 through 2004 Source: Bureau of Economic Analysis, Bureau of Labor Statistics The MSA s unemployment rate decreased from a high of 7.5 percent in 1992 to a low of 2.6 percent in The unemployment rate in 2004 for the MSA was 4.3 percent. Between 1990 and 2004, unemployment rate averaged 4.7 percent; lower than the country-wide average of 5.6 percent between the same period. In 2001, the MSA s per capita income was approximately $27,003, which was approximately $3,400 lower than that of the U.S. s per capita income of $30,413. Additionally, from 1990 through 2001, the MSA s per capita income grew at a lower annual rate of 3.5 percent than that of the U.S. s growth rate of 4.1 percent. The low per capita income may indicate that there is a lower level of discretionary income within the MSA to be spent on recreational activities; however, this is mitigated in part by the historically lower than national unemployment rate. Residents effective buying income (EBI) also helps to demonstrate the amount of disposable income that is available locally, and this data is shown in Table University of Central Florida Section 3 Page 15

28 Table 3-11 Orlando MSA Effective Buying Income (EBI) 2004 Total EBI ($Millions) Median Hsld EBI % of Hslds by EBI Group $20,000 - $34,999 $35,000 - $49,999 $50,000 + Lake County $4,665 $35, % 20.2% 29.8% Orange County $18,849 $38, % 19.8% 35.1% Osceola County $3,133 $35, % 21.8% 28.4% Seminole County $9,219 $45, % 19.9% 44.7% Orlando MSA $35,866 $38, % 20.1% 35.7% U.S. $5,466,880 $38, % 19.0% 35.4% Source: Sales and Marketing Management As the table shows, the MSA had a total EBI of nearly $35.9 billion and a median household EBI of $39,000 in Similar to per capita income, the median household EBI of the Orlando MSA was greater than that of the US ($38,200). Transportation Location and physical characteristics of the subject property are important factors which influence development opportunities, project marketing, and attractiveness for entertainment and recreational events. Such factors as access, surrounding land uses, support services, and physical site features will impact either positively or negatively upon overall development opportunities and market potential. Observations and key findings relevant to the subject site are discussed below. As discussed earlier, the proposed site is on the University of Central Florida s main campus in east Orange County, Florida. The campus is located approximately 13 miles east of downtown Orlando and is within approximately 2.5 miles of two limited access/toll road facilities (SR 417 and SR 408) affording excellent regional accessibility. The Central Florida Greenway (another name for SR417) is a major limited access toll facility, located just 2.5 miles from the UCF campus serving the eastern part of the Orlando urban area providing direct linkages to Interstate 4 to the north and south, Orlando s East-West expressway (SR408), the Beeline Expressway (SR528), and Florida s Turnpike to the south. The UCF campus is approximately 18 miles from Orlando International Airport and about 40 miles from the Atlantic coast (the location of Volusia and Brevard County). UCF s expansion has been a critical factor influencing the growth and development of the East Orange County area. University of Central Florida Section 3 Page 16

29 UCF has the nation s seventh largest research park and the largest in the state. It boasts more than 9,000 employees. UCF has been a magnet for major national research and technology companies, spawning development of surrounding corporate parks as well as general business tenants that have contributed to an expanding population base along with extensive commercial and residential development. UCF s shuttle services provide free transportation services to/from on-campus residential communities and all areas and facilities on campus. Shuttles run from 7:00 am to 10:00 pm daily on 15-minute headways. Additionally, UCF operates shuttle service to off campus student-oriented apartments within approximately one mile of the campus as part of its effort to alleviate inconvenience forced to live offcampus due to the shortage of on campus housing capacity. The Orlando International Airport is the 13 th largest airport in the U.S., and the 19 th largest in the world. The growth of the metro area and its location has helped to make the airport a busy regional hub for air service, and it is currently planning an expansion project to double its size. In 2003, the airport served more than 27.3 million domestic and international travelers. The facility is served by 16 domestic and 18 international airlines, providing 72 non-stop/13 true-direct US destinations and to 13 non-stop/9 true-direct international destinations. In addition to the Orlando International Airport, Orlando Sanford International Airport provides both commercial and charter service, and the majority of its commercial operation is international (in 2003, 63 percent of its 1.25 million passengers were international). The area also has four general aviation airports, including the Kissimmee Airport, which is the closest general aviation facility to Disney World and other theme parks, as well as the Orange County Convention Center. Also, although the Orlando area is not on Florida s coast, the region is nevertheless within a fairly short distance to a number of ports and waterways, including Sanford (20 miles from Orlando), Port Canaveral (40 miles), Tampa (84 miles), and Jacksonville (139 miles). The Port of Jacksonville is the 13 th largest container port in the country. Corporate Presence In general, a strong corporate and business presence can also be an important factor in the success of a new athletics venue because local businesses can attract residents to an area, provide disposable income to residents, and can support facilities through donations, advertising, and their requirement for event space. In addition, local companies are also a common source of demand for premium seating in sports facilities. Because of central Florida s economic reliance on tourism and hospitality, a relatively large share of its employment serves this industry. Many of the area s University of Central Florida Section 3 Page 17

30 largest employers are attractions and resorts, and the Walt Disney Company is by far the area s largest employer. However, as Orlando and the surrounding areas are a large, growing metropolitan market with a major airport, the area also has an increasingly strong and diversified corporate presence especially in the aerospace, banking and technology sectors. Table 3-12 shows the largest employers in the Orlando MSA, Brevard County, and Volusia County, by number of full-time employees, in Table 3-12 Largest Employers Metro Orlando Area, Brevard County, and Volusia County Name Location Number of Employees Walt Disney World Lake Buena Vista 53,500 Orange County Public Schools Orlando 22,807 State of Florida Government Orlando MSA 17,200 Adventist Health System Winter Park 17,059 Wal-Mart* Orlando MSA/Volusia Co. 15,345 Florida Hospital Orlando 14,225 Orlando Regional Healthcare Orlando 12,754 Universal Orlando Orlando 12,000 Federal Government Orlando MSA 10,800 Publix Supermarkets Orlando MSA 9,927 Volusia County Schools DeLand 8,998 Brevard County Schools Viera 8,535 Seminole County Public Schools Sanford 8,490 University of Central Florida Orlando 8,250 Orange County Government Orlando 7,426 Lockheed Martin Orlando 7,350 Marriott International* Orlando MSA 6,468 Harris Corporation Melbourne 6,391 Halifax Staffing, Inc. Daytona Beach 6,330 United Space Alliance Cape Canaveral 6,300 Central Florida Investments Orlando 6,200 Health First, Inc. Rockledge 6,000 Osceola County Public Schools Kissimmee 5,480 Darden Restaurants, Inc. Orlando 5,000 *2002 information. Source: Metro Orlando Economic Development Corporation, Economic Development Commission of Florida's Space Coast, Volusia County Department of Economic Development, Johnson Consulting As the table shows, Disney employs approximately 54,000 people, more than double that of Orange County Public Schools which is the second largest in the area. Other main employers in the MSA are in a variety of industries, such as tourism and University of Central Florida Section 3 Page 18